Spartanburg-based Advantica Restaurant Group closed the divestiture of its subsidiary FRD Acquisition Co, the parent company of the Coco’s and Carrows restaurant brands, on Wednesday.
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The divestiture was completed through FRD’s Chapter 11 reorganisation proceedings. Pursuant to the reorganisation plan, FRD’s unsecured creditors, who were generally the holders of FRD’s 12 1/2% senior notes, received 100% of the reorganised equity of FRD.
As part of the transaction, Advantica’s subsidiary, the full-service family restaurant chain Denny’s, received a payment of US$32.5m in connection with FRD’s senior secured credit facility where Denny’s was lender. Such payment represented all outstanding obligations under the facility less a US$10m discount.
FRD’s Letters of Credit under the prior credit facility remain outstanding. They secure certain obligations of FRD and its subsidiaries under various insurance programmes which will be satisfied in the ordinary course of business. Denny’s has agreed to continue to provide the cash collateral supporting these letters of credit (currently US$5.7m) for a fee until the letters of credit terminate or are replaced. Denny’s also received a separate four-year note payable from reorganised FRD for continuing to provide the cash collateral.
In connection with the divestiture, Advantica and FRD have entered into a Transition Services Agreement (TSA), whereby Advantica will continue to provide various management and support services for a fee over an initial term of up to one year.
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By GlobalDataWith the closing of the FRD divestiture, Advantica has now completed its transition from a restaurant holding company to a one-brand entity in Denny’s. Accordingly, Advantica has changed its name to Denny’s Corporation. In addition, its common stock will begin trading under the new ticker symbol “DNYY”.
